Today's Best Mortgage and Refinance Rates: January 12, 2021 | Rates Increase

The share of mortgages in forbearance decreased slightly after two weeks without much change. However, homeowners still in forbearance are likely in some form of economic distress and unlikely to be in position to start making monthly mortgage payments anytime soon.

Meanwhile, mortgage rates continue to move upward, rising .079 percentage points from Friday to Monday.

Today's Mortgage Rates

The average interest rate on a 30-year fixed-rate mortgage was 3.181% on Monday — up from 3.102% on Friday.

Source: Money | Date: Jan. 11, 2021 | Rates assume a credit score of 700

Money's daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the previous day. They reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. The rates assume a 20% down payment and include discount points.

Freddie Mac's widely quoted Primary Mortgage Market Survey put mortgage rates at 2.65% with 0.7 points paid for the week ending January 7, setting a new record low. That's 0.02 percentage points below last week. Rates set new record lows 16 times in 2020. This is the first all-time low set in 2021. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

How do I get the best mortgage rates?

Mortgage rates vary from state-to-state. On Monday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.106%. People looking for mortgages in Nevada saw the highest average rate at 3.324%.

Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.941%, while those with credit of 620 or below were shown rates of 4.435%.

You may be able to negotiate a better interest rate if you shop around or if you have other accounts with the lender. (To get started, take a look at Money's picks for the best mortgage lenders.) Currently, some lenders are hiking up advertised rates to keep demand in check, so you may be offered a lower rate if you reach out directly.

Today's Mortgage Refinance Rates

Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.301% on Monday. In January 2020, the average mortgage rate (including fees) was around 3.8%.

Source: Money | Date: Jan. 11, 2021 | Rates assume a credit score of 740

What else is happening in the housing market today?

The share of mortgage loans in forbearance decreased 0.07 percentage points to 5.46% during the week ending January 3, according to the Mortgage Bankers Association. The decreases were across all loan types.

The share of loans taking advantage of the payment deferral programs has hovered above 5% for two months after a significant number of exits in the late summer and early fall. Homeowners who were able to keep current on their mortgage payments while in forbearance have largely exited the plans, leaving borrowers with greater hardship.

"The data show that those homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments and fewer exiting forbearance each month," said Mike Fratantoni, MBA's chief economist. "Those borrowers who do exit are more likely to require a modification to their ongoing repayment plans."

The recent surge of COVID-19 infections has put a halt to the economic recovery in many areas. After months of employment gains, December saw the first monthly job loss since April, with many of those losses coming in the hospitality and leisure industries. As result, Fratantoni does not expect a significant drop increase in exits in the foreseeable future.

"We expect that this slowdown will prevent any rapid improvement in the forbearance numbers over the next few months," he said.

Mortgage Prediction of the Week

Expert views on what's next.

Nick Bailey, chief customer officer at real estate brokerage RE/MAX, on the future of the housing market in 2021:

For more read: 2021 Real Estate Predictions: How Vaccines, President Biden and More Could Shape Housing Trends.

Bottom line:

9 Steps to Take Now That Will Prepare You for Buying a Home in 2021

Current Mortgage Rates: 30-Year Mortgage Rates Hit a New Low

A Key Indicator Suggests Mortgage Rates' Epic Decline May Soon End